Readers' comments

Command and control can work. After all, Hitler completely revived the German economy from the Great Depression in just a few years. The economic lessons of the Third Reich are certainly not lost on China. If the domestic economy in China continues to weaken, expect them to start a massive armament program, just like Hitler did.

China is a one-party dictatorship,as the artical said,from a bureaucratic system with an executive order to control the eonomy.
unlike Western countries is that China's bankers not only failed to reduce the size of lending,but placing loans,i can only say that this is against their own country to deal with the financial crisis in a matter of policy.if the statistcs is a lie,and the banks are not strong enough to stand the situation,it will dispose problems sooner or later......

Chinese banks and issuing of consumer credits are only at their infancy. Once both matured, China will find itself in the same predicaments as more advanced E Asian countries such as Korea and Taiwan with big hordes of "Ka Nu" (c/card slaves) so serious they found legislation necessary to curb run-away credit spending.Prudence and moderation...well, the Cultural Revolution wasn't particularly prudent nor moderate so please stop blowing your own trumpet. It's like boasting you're not involved in the horrific car accident because you can't afford to buy one.

Gentlemen, you're at it again!
Shouldn't it trouble you that every one of the preceding 17 comments disagrees with your article on a well reasoned basis? What else could these readers do? Perhaps if you walked away with only the following comments that I culled below, your connection with reality would have improved considerably:
"- I never thought I would say this, but despite their problems I would prefer to have my money in a Chinese bank than an American one right now (Ulrich 123)
- Isn't opacity the problem of banks everywhere? Banks admit losses (due to write-downs of so-called 'toxic assets' or otherwise) only when the problem is so acute that tax payers' money is urgently needed to fill the gap (escha)
- maybe the Economist also missed one very important aspect of China and Chinese business: that they take the long view? while the situation now is not rosy around the world and even in China, the Chinese look at the underlying fundamentals and decide that it should not throw out the baby with the bath water (surg onc)"
You're not doing yourselves any favour by bashing China, especially when facts are so obviously at variance with your perception - repeatedly! Rather than be so mulish, sell your pound sterling (dwindling fast!) and invest in Chinese equity.
Wake up! Or we'll keep reading The Economist for its involuntary comical value as I do now... The readers' comments are far more informed than your articles on China (and Russia, and the EU, and... and...)

I am not an expert on China but maybe The Economist needs to realize that none of the emerging market banks in Asia have required government funding.
On stories about factories in China being closed: If you're going by statistics, shouldn't you be telling us how many factories are closed and how this impacts? Raising suspicion without laying facts makes The Economist very biased on this article.

In the first instance, the US banks have been decimated
by their sub-prime/CDOs/CDS holdings which had minimal
imapact on Chinese banks. Secondly, there are very large savings rates in China with. for example, approximately
RMB20 trillion in personal savings and personal loans of
only RMB3.7 trillion so it makes sense that China's big
banks should be in much better shape then US/UK/EU banks. Generally the Economist is objective and fact-based,
except, it seems, when it comments on China. Perhaps it
is a reflection of one of the reasons for the financial crisis in the US - an unrealistic view that only the "free-market" as defined in the US and the UK (at least before this crisis), can really work effectively?

In the first instance, the US banks have been decimated
by their sub-prime/CDOs/CDS holdings which had minimal
imapact on Chinese banks. Secondly, there are very large savings rates in China with. for example, approximately
RMB20 trillion in personal savings and personal loans of
only RMB3.7 trillion so it makes sense that China's big
banks should be in much better shape then US/UK/EU banks. Generally the Economist is objective and fact-based,
except, it seems, when it comments on China. Perhaps it
is a reflection of one of the reasons for the financial crisis in the US - an unrealistic view that only the "free-market" as defined in the US and the UK (at least before this crisis), can really work effectively?

@ hmmmmmmmAs a percentage of the population, credit cards may not be widely held but that doesn't mean credit cards are not being issued and used in ever-growing numbers, especially by those with disposable income. It should be noted debit card usage is much higher, underlying trust in the banking system.

maybe the Economist also missed one very important aspect of China and Chinese business: that they take the long view? while the situation now is not rosy around the world and even in China, the Chinese look at the underlying fundamentals and decide that it should not throw out the baby with the bath water. perhaps there is a consensus among the Chinese people that sacrifices have to be made now for a more prosperous future. could be difficult for many people outside China to accept but maybe there is nothing sinister at all?

Sometimes it is just better to admit to not knowing, or understanding, then to widely speculate. Somehow, everybody just KNOWS that China is doing something underhanded, as it makes no sense that they would be spared the spreading financial infections. The Economist would do all of us a BIG favor to performe a true analyis of the operations and the breakdown of ownership in Chinese large banks. One of the problems that we are encountering is the complete shift of paradigm. Chinese capitalism is essentially --- more capitalist. What we continue calling "state" owned banks, enerprises, is a very wrong definition. This is why everyone gets shocked that their "state" banks and enerprises, supposedly inefficient, produce great results. One of the reasons is the treatment of all money as capital. There is no such thing as the "government money" to be "spent" on whatever. All of public money spent is treated as an investment; government's payment for jails, infrastructure, or anything, is actually an investment that is managed by multiple joint stock companies. One or more of them manage the public funds invested in the joint project. An investment in building a railroad, airport or a jail, could be typically managed by various stakeholders who invest the money, such as a local government, state ministry of railroads, etd. along with the private (domestic or foreign) company that will build or deliver services or both. While the company executing the work or performing services gets often a larger share of profit, it is not always the case. It all depends whether they are capable of raising independent financing, or they depend on the government's public funds to get the contract. While some companies in the venture contribute the knowhow and the execution, others are responsible for all the support work, such as infrastructure, local regulations and permits, translation, etc. All have stake in making profit, whether it is construction, goods or services. Whether it is for domestic use, or for export. This is how taxpayers' money works for the taxpayer, and this is how large sovereign funds are being created. And this is how the funding for many public needs is earned. Sometimes the earnings are earmarked for specific public spending, such as railroads, roads, bridges, ports, a local government budget, etc. At other times, funds go to general funds. Because of the endless variety of such public-private ventures, it is not simple to define, at least not for non-specialists. While I do not have any knowledge about the public-private ventures in banking, it stands to reason that any public money invested would be treated as capital as well. In looking at the system, it is still like blind people examining an elephant. However, The Economist is not helping. The old, worn out guesses are not substitute for real information. And I do not think that it is particularly a secret. Except that the folks with a preconceived ideas will have hard time keeping and open mind --- and ears.

The economist just missed a major point about Chinese bank. That compare to western banks, the Chinese really don't do much. If you been to China, you'll realize that very few Chinese people owns credit card, they don't write checks for anything, few people take out mortgages or loans ( they prefer to borrow from friends and family instead or mafia relate underground financial market ) and the bank pay very little interest on deposits. Most people put money in bank just to avoid having their home robbed than anything else. All this probably means during boom times, the bank isn't making much profit, but by luck it somehow avoided disaster. But this isn't good for the long term as it is a grossly inefficient way to allocate savings. Also it would be interesting to look at the state of those unconventional ways of financing in China. I'm sure there is a lot of broken friendships, strained family relations and broken legs as result of this financial crisis.

Isn't opacity the problem of banks everywhere? Banks admit losses (due to write-downs of so-called 'toxic assets' or otherwise) only when the problem is so acute that tax payers' money is urgently needed to fill the gap. However, the amount of losses admitted at any time appears to be closely correlated to the sum of public money asked for. Looking at the course of events at banks such as Hypo Real Estate it is very difficult to believe that the fractional admission of losses over time ever gave a transparent picture of the true situation. Is it really a good idea to save all these banks? Somebody will have to bear these losses sooner or later anyway!